Florida residents' income drops 1.5 percent

Friday

Jun 28, 2013 at 6:17 PM

Surge in fourth quarter adds to decline in first.

By MICHAEL POLLICK

Personal income in Florida declined in the first quarter of 2013, reflecting a drop in dividend income compared with the previous quarter as well as the expiration at the beginning of the year of a temporary two-point reduction in the amount taken out of paychecks for Social Security.

On Friday, the federal Bureau of Economic Analysis reported that Florida's income dropped by 1.5 percent in the first quarter, after gaining 2.6 percent in the fourth quarter.

For the nation as a whole, the first quarter drop was 1.2 percent, after growing 2.7 percent in the fourth quarter.

For 2011 and 2012, the government had trimmed how much workers were paying toward Social Security to 4.2 percent from the normal 6.2 percent to help stimulate the economy. That reprieve ended in January.

States such as Florida and California also saw reductions in dividend income in the first quarter.

“There was a big push by corporations, because of the fiscal cliff negotiations and uncertainty about how dividends were going to be taxed, to pay out dividends earlier,” said Sean Snaith, economist at the University of Central Florida and director of the school's Institute for Economic Competitiveness.

The result was that fourth-quarter personal income was beefed up by extra-large dividend payouts by many publicly traded companies.

Then first-quarter income was trimmed by a commensurate amount.

The Florida picture: personal income for the state's residents was running at an annual rate of $786.7 billion in the first quarter, compared with $798.5 billion rate in fourth quarter 2012.

Florida's dividends interest and rent fell by $9.3 billion in the quarter, exceeded only by a $10.9 billion dip in California.

“In Florida, you've got a higher percentage of people, retirees, dependent on that type of income,” Snaith said. “When that type of income falls, we are going to take a disproportionate hit statewide.”

The slip in first-quarter personal income fits with the fact that the first quarter turned out to be rather anemic in overall economic output, measured by gross domestic product, or GDP.

While earlier government calculations put first-quarter GDP growth at 2.4 percent, the final revisions, which came out this week, showed output only grew by 1.8 percent.

Personal consumption, which had been touted as being one of the most resilient parts of the economy, was revised downward to 2.6 percent from 3.4 percent.

“It was a pretty weak quarter for the economy,” Snaith said.

He expects to put out his next forecast for Florida's economy sometime in July.

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